‘Nigeria, South Africa drive region’s growth’

Nigeria and South Africa account for major portion of Africa’s Gross Domestic Product (GDP), the International Monetary Fund (IMF) report said.

It said intraregional trade and financing links within sub-Saharan Africa have been expanding significantly in recent years. However, it recognised that there is a long road to travel in terms of achieving close economic integration at the regional and sub-regional level.

“As this integration proceeds and economic linkages deepen, the importance of spillover effects from large countries to the rest of sub-Saharan Africa, and within their own sub-region, will grow: closer economic linkages inevitably imply increased exposure to shocks, both favorable and unfavorable, in partner countries,” it said.

IMF African Department senior economist Cheikh Gueye said that to a large extent, South Africa is shaping the structure of trade within sub-Saharan Africa. He said that at least 12 countries in sub-Saharan Africa export to South Africa and this represents one per cent of their GDP.

“On the investment side, we have noticed that South African companies are investing in the rest of Africa, and this has an impact in shaping trade flows. Third, there are linkages in the financial system. Since 2005, Nigerian banks have extended their operation in many countries in sub-Saharan Africa. That is also true of South African banks,” he said.

According to him, Nigeria has different trade policies through its neighboring countries, and these policies have been a source of transmission of shock from Nigeria to the other countries.

“Let us look at South Africa and its trade channel because it is quite large. South Africa is part of the SACU, the South African Customs Union. The country and the other members of the SACU have what we call a customs revenue sharing formula.

This means almost 50 per cent of the customs revenues within the zone will go to the remaining countries of the SACU,” he said.